A lump-sum payment may be combined with a structured settlement in order to meet immediate expenses, such as medical bills, repayment of debts, rehabilitation costs, and the like.
Guidelines to use present value calculator for perpetuity
Payment amount:
- Payment amount is the amount of money you receive per period.
- It should be greater than zero
Interest rate per period:
- Annual nominal interest rate at which the future value of growing perpetuity is discounted.
- Enter rate in terms of percentage. It should be greater than zero.
Growth rate per payment:
- Growth rate per payment is the rate at which your annuity grows per period of payments.
- It should be greater than zero.
Payment at period:
- Payment at period is when the payment is made in a period.
- It can be either 'end of period' if the payment is made at the end of the period (Ordinary annuity, in arrears) or 'beginning of period' if the payment is made at the beginning of the period (Annuity due, in advance).
Result:
- The calculated present value of growing perpetuity.
Get a clear understanding of PV of a growing perpetuity explained here.
A series of cash flow or payments growing at certain rates for an infinite period of time is what growing perpetuity is all about. Computing the present value of a growing perpetuity is imperative because it paves way to value stocks and other investment opportunities available. This online calculator will help you compute the geometrically increasing perpetuity; the derived complex mathematical formula will do the calculation for you.
Theoretically speaking, if the discount rate is lesser than the growth rate, then the growing perpetuity would have an infinite value, on the other hand, a delayed perpetuity is uninterrupted series of payments that starts at a predetermined date in the future.